Ledger Investing raises $10m Series A to scale-up ILS offering

Ledger Investing, an insurance technology (insurtech) and insurance-linked securities (ILS) focused venture-backed start-up, has announced raising a $10 million Series A round, as it looks to scale-up its platform and broaden the world of insurance securitization.

The new financing round was led by AllegisNL Capital with participation from prior investors including, MassMutual Ventures, Signalfire, Accel and Crosscut Ventures.

Ledger’s goal is to directly connect risk with the deepest pool of available capital, from the capital markets and insurance-linked securities (ILS) investors.

The start-up welcomed Samir Shah, the ex-Head of Insurance Capital Markets at AIG, as its Chairman and CEO in late 2016 and raised $5 million of seed funding in 2017, as it began its mission to enhance the way insurance and reinsurance companies fund their risks, using securitization and technology.

Ledger Investing’s first transaction was an innovative direct securitization of a portfolio of non-standard passenger auto insurance, between an MGA and the AIG-owned insurance-linked securities (ILS) fund manager AlphaCat in early 2019.

The Ledger platform brings together data, analytics and real-time computing, through which it aims to “deliver unprecedented transparency, objectiveness and reliability in the rating of insurance risks to institutional investors.”

Focusing on standardised security structures, Ledger believes it offers “a scalable platform to deliver high alpha investment opportunities that are uncorrelated to the broader asset classes.”

The company offers MGAs and brokers a way to more directly access licensed insurers and capital, while it offers insurers a more direct route to access flexible, lower-cost, off-balance sheet capital in ILS form.

Ledger believes that insurers can both reduce risk on their balance-sheets while increasing returns-on-equity (ROE) at the same time, through utilising its data analytics and computing power, alongside insurance securitization and the capital markets as a source of reinsurance capital.

“Ledger has now connected auto and workers compensation risks originated by more than fifteen MGAs to capital from the ILS market. With this investment we can connect risk and capital at large scale,” explained Samir Shah, Co-founder and CEO. “We have entered into strategic agreements with risk originators to place large blocks of casualty risks into the capital markets. Ledger has also entered into strategic agreements to provide paper and a balance sheet through which we can provide a one-stop shop for flow into the capital markets.”

“Ledger is enabling a two-sided marketplace through the use of technology that will lower the cost of capital for insurance risk, benefiting existing insurers, new insurance startups and the consumers of insurance products,” Victor Westerlind, Partner of AllegisNL Capital added. “Bringing down the costs this way has the opportunity to expand an already large, trillion-dollar global market.”

“Ledger provides capital markets seeking uncorrelated returns with an efficient way to access life and P&C risk, while simultaneously expanding the risk-sharing pool for traditional carriers and MGAs,” Eric Emmons, managing director at MassMutual Ventures also said. “Ledger’s proprietary analytics and securitization platform enables these constituencies to create mutually-profitable contracts within the trillion-dollar global insurance market.”

“Ledger makes it easy for insurers to get the capital they need while helping investors find the smartest ways to diversify,” Ilya Kirnos, SignalFire’s​ ​founding partner and chief technology officer noted. “SignalFire has been privileged to support Ledger as the company has built the world-class team necessary to perform this complex matchmaking at massive scale.”

Ultimately, Ledger’s goal is to provide a business-to-business marketplace for the securitization of insurance risk, leveraging its analytics and technology to enable greater transparency and understanding of risk and capital flows, with the result being that a more diverse range of risks become appealing to capital market investors.

If Ledger can provide the necessary confidence to insurers and investors that the transparency and functionality they provide makes the risks more understandable and as a result investable, then it could add a new route to diversifying perils for ILS funds and investors.

The $10 million Series A should provide Ledger Investing with ample runway to discover if the capital market for these often longer-tailed risks are as big as they believe them to be.

Ledger said that it has entered into “strategic agreements with risk originators to place large blocks of casualty risks into the ILS market,” as well as “strategic agreements to provide paper and balance sheet to facilitate the flow of risks into the capital markets.”

Data analytics and real-time computing has the potential to make liability and cash flows more predictable over-time, which ultimately could make risks more transferable to a wider range of investors, helping to grow the ILS market pie.